Recovering stronger after financial setbacks
Ghana has encountered significant financial difficulties in recent years, characterized by the government’s restructuring of its debt, elevated inflation rates, and a thorough cleansing of the banking sector. The implementation of Mark-to-Market valuation for mutual funds holding Government of Ghana Bonds has added complexity to the financial environment, resulting in substantial losses and reduced investments for numerous individuals.
During periods of instability, it is crucial to prioritise financial resilience. People’s resilience is demonstrated by their capacity to adjust, acquire knowledge, and come back stronger from these economic challenges, establishing the foundation for enduring financial stability and assurance.
People frequently encounter several obstacles in the complex domain of finance. Excessive spending, accruing debt, and failed investments contribute to problems that can disrupt even the most careful financial strategies. The emotional and mental strain of these financial losses can result in increased worry, anxiety, and a fluctuating self-assurance in one’s financial choices. As stressful as financial setbacks can be, they can be overcome when strategic interventions are put in place.
Building an Emergency Fund
An essential aspect of maintaining financial resilience is the creation of an emergency fund. This fund functions as a backup measure in the event of unforeseen financial difficulties, such as unemployment or medical crises. Ghanaians are advised to accumulate a minimum of three to six months’ worth of living costs in a readily accessible account.
Diversifying Investments
Ensuring stable returns and limit risks, diversification remains crucial. Ghanaians can mitigate the effects of market volatility on their investment portfolios by diversifying their investments across different asset classes such as equities, bonds, real estate, and commodities.
Budgeting and Financial Planning
A carefully constructed budget provides an accurate framework for managing finances, facilitating effective distribution of resources and prioritizing spending. Regularly reviewing and making necessary adjustments to the budget helps individuals stay on track with their financial goals, such as buying a home, supporting college, or saving for retirement.
Seeking Professional Financial Advice
In addition to self-education, seeking professional financial assistance is extremely important. Expert advisers provide customized guidance, assisting Ghanaians in navigating intricate financial landscapes and making choices that align with their objectives and risk preferences.
Let me share some testimonials of people I have dealt with relative to building financial resilience. For the purposes of anonymity, I will use the names Ama and Kwame.
Ama, a young entrepreneur, encountered significant financial setbacks as a result of the banking sector’s cleanup, which had a rippling effect on her investments. The majority of her capital and investments were tied up in one of the now-defunct banks. To recover from her setback, she expanded her sources of income, improved her methods of budgeting, and sought guidance from her financial advisors. Today, Ama has successfully restored her financial security, demonstrating the profound impact of her ability to bounce back and adjust to new circumstances. Her business is thriving.
Kwame, a passionate investor, faced substantial losses during a period of economic reforms. Undeterred, he expanded his investment portfolio, implemented long-term investment strategies, and sought advice from experienced financial professionals. Over time, Kwame not only recovered his losses but also realized substantial gains, highlighting the significance of staying resilient and being strategically adaptable.
Financial resilience extends far beyond just surviving financial challenges; it is about flourishing in the face of adversity. By implementing key financial strategies such as establishing emergency funds, diversifying investments, practising responsible budgeting, and consulting with professionals, one can strengthen their financial future. Stories of triumph and valuable insights serve as powerful reminders that setbacks are a natural part of life. However, with resilience, unwavering determination, and careful strategic planning, a brighter financial future can be achieved. Embrace the path to financial resilience today and set a course for a more prosperous future.
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James Otchere is an Investment Advisor certified by the Chartered Institute of Securities and Investments in International Wealth Management (CISI-UK). With a decade’s experience spanning Business Banking Solutions, Relationship Management, and Investment Advisory, he began as a Fund-Raising Executive for major NGO projects and later consulted for SMEs in Banking. Presently an Investment Advisor at Stanbic Investment Management Services (SIMS) while also actively advocating for saving and investment awareness in Ghana